Nation's Building News Online

Builders View Market With Sense of Caution

Concerned about the uneasiness of consumers over impending war, an anemic economy, growing unemployment and bad weather, home builders surveyed earlier this month became less confident about their business prospects.

NAHB’s Housing Market Index (HMI), a monthly gauge of builder sentiment, fell to 52 for March, down 10 points from its February reading and the lowest level since November of 2001. The index dipped to 47 in the immediate aftermath of the September 11 terrorist attacks, but rallied steadily in subsequent months.

The survey asks builders to rate current sales of single-family homes, sales expectations for the next six months and their traffic of prospective buyers.

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 All three declined in March: current sales to 59, future sales to 57 and traffic to 35.  Any number over 50 indicates that more builders view sales conditions as good than poor.

Conceding that builder confidence had taken “a substantial hit,” NAHB Chief Economist David Seiders indicated that falling mortgage interest rates, healthy appreciation in house values and lean inventories of unsold homes all raise the possibility that builder sentiment will rebound quickly in the months ahead.

“It’s more a sense of needing to be cautious heading forward,” he said of the decline in builder confidence.

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